Public Relations

Published on September 15, 2003.

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Public relations is largely a 20th-century development. When muckraking journalists in the first decade of the century roused the public against alleged abuses of big business, business leaders began to recognize the necessity of telling their side of the story.

A major figure in the development of PR was Ivy Ledbetter Lee. In direct contrast to the "public be damned" attitude of many business and financial leaders of the day, Mr. Lee counseled his clients on open, honest communication. In his famous "Declaration of Principles" to newspaper city editors, Mr. Lee pledged to supply the press and the public with prompt and accurate information on behalf of his business clients. The document drew a clear distinction between the role of his "press bureau" (the term "public relations" was not yet in common use) in supplying news and information and the role of ad agencies in supporting sales.

Mr. Lee is perhaps best remembered for his longtime work for John D. Rockefeller. Mr. Rockefeller engaged Mr. Lee while under fire for strikebreaking activities during a long and bitter strike against the Colorado Fuel & Iron Co. In the wake of the Ludlow Massacre, a notorious event in which 53 miners were killed, Mr. Lee was credited with restoring the family reputation by extolling Mr. Rockefeller's philanthropy in education, science and medical research.

Another significant figure in PR history was Edward L. Bernays. During World War I, Mr. Bernays was a member of the Committee on Public Information headed by George Creel, which is credited with mobilizing public support for the war. In 1923, he wrote "Crystallizing Public Opinion," the first book on PR, and taught the first course on the subject at New York University. He was known in particular for his efforts to humanize President Calvin Coolidge's image.

Other notable early PR pioneers included Benjamin Sonnenberg, John W. Hill, Carl Byoir and Henry Rogers. Mr. Sonnenberg was social arbiter, press agent and publicity counsel to some of the most important businessmen and famous personalities of the 1930s and '40s. His signature accomplishment was to convince his client Texaco to sponsor broadcasts of New York's Metropolitan Opera on radio.

John W. Hill co-founded Hill & Knowlton in Cleveland in 1933. When Mr. Hill won his first major account, the American Iron & Steel Institute, the agency moved its headquarters to New York, where Mr. Hill built the world's first broad-service PR counseling firm.

In 1930, Carl Byoir founded the PR firm bearing his name initially in Havana before moving it to New York. At midcentury, Carl Byoir & Associates and Hill & Knowlton were the two dominant PR firms representing major U.S. corporations. Mr. Byoir himself is best known for promoting Cuba and Florida as travel destinations and for creating the "Birthday Ball" for President Franklin D. Roosevelt to raise funds for the Infantile Paralysis Foundation, which led to the creation of the March of Dimes.

Henry C. Rogers and his partner, Warren Cowan, formed Rogers & Cowan, based in Los Angeles, which became the largest and most successful PR firm on the West Coast. Mr. Rogers represented such motion picture stars as Rita Hayworth, Joan Crawford, Frank Sinatra, Dean Martin and Paul Newman.

The post-World War II period saw the rise of corporate PR departments (usually called corporate communications) and the rapid growth of newly formed PR firms, many of them started by returning veterans. In New York, William Ruder and David Finn started Ruder Finn in 1948, and in 1953, Harold Burson, in partnership with advertising executive William Marsteller, founded Burson-Marsteller. That year Daniel J. Edelman opened the agency bearing his name in Chicago.

From service to subsidiary

During the 1950s, many of the largest ad agencies operated PR units under the agency's name. They included Young & Rubicam, McCann-Erickson and Batten, Barton, Durstine & Osborn. Most of those units were discontinued because they were unprofitable (big advertising clients expected the agency to provide PR at low or no cost) and unable to compete with independent PR firms that clients regarded as PR professionals.

In the 1970s, advertising agencies, including those that had earlier abandoned their own PR units, recognized that PR was an important component of a "full-service" agency. They also saw PR as a contributor to "below the line" profits (i.e., not dependent on media commissions) and a means to gain access to clients at the top management level.

The first major PR firm to be bought by an advertising agency was Carl Byoir & Associates, acquired by Foote, Cone & Belding in 1978; it was subsequently sold in 1989 to Hill & Knowlton. Other major acquisitions included Burson-Marsteller, by Y&R, and Hill & Knowlton, by J. Walter Thompson Co.

The growth of PR firms was largely a U.S. phenomenon until the 1970s, when three U.K.-headquartered agencies acquired major PR firms in the U.S. and elsewhere. Saatchi & Saatchi acquired the Rowland Co.; WPP Group acquired two major U.S. advertising agencies, JWT, with its PR subsidiary Hill & Knowlton, and Ogilvy & Mather, with its PR subsidiary Ogilvy, Adams & Rinehart; and Shandwick, a PR conglomerate, acquired several PR firms around the world and a dozen in the U.S., including Golin/Harris and Rogers & Cowan, whose brand names are still retained. By 2000, 12 of the top 15 PR firms were owned by advertising agencies.

Organizations

The two major professional organizations serving the field are the PR Society of America, headquartered in New York, and the International Association of Business Communicators, located in San Francisco. Organized in 1947, PRSA is the world's largest organization for PR professionals. Its nearly 20,000 members represent business and industry, counseling firms, government associations, hospitals, schools, professional service firms and nonprofit organizations. PRSA publishes The Strategist, a quarterly journal, and PR Tactics, a monthly newspaper. IABC has 13,700 members and publishes Communications World.

Both PRSA and IABC have accreditation programs requiring candidates to pass written and oral examinations. Accredited PRSA members are designated APR (Accredited in PR); accredited IABC members are designated ABC (Accredited Business Communicator). PRSA and IABC each has its own code of ethics. The PRSA Code of Professional Standards for the Practice of PR was adopted in 1950. IABC adopted its first code in 1976. Both encourage their members to be truthful and accurate, and both have the ability to suspend members for violations.

In 1998, the Council of PR Firms, the first trade association to represent the interests of U.S. PR firms, was formed in New York by large and midsize agencies.

In addition, several networks of independent PR firms serve clients worldwide and compete with the large multioffice international PR firms.

Annual PR awards competitions honoring the best PR programs in various categories are sponsored by the PR Society of American (Silver and Bronze Anvils), IABC (Gold Quill Awards) and PR Week and the Holmes Report (Sabre Awards).

In 2001, the top 10 U.S. PR firms had combined U.S. revenues of $1.58 billion, down 9.6% over the year earlier, representing 53.1% of total revenues for the industry as a whole. The fastest-growing area of PR was healthcare, with technology the leading loser.

With holding companies no longer breaking out revenues for each PR agency and annual reports defining the sector in various ways, by 2004 it was difficult to assess how the industry had fared compared with advertising. In rankings of independent firms, Edelman headed the list with revenue of $138.4 million in 2003, up 2% from the previous year.